Commentary

The Most Expensive Mistake You Can Make

by David Koretz , June 4, 2009

Trying to save money by not hiring a salesperson is like tying two rocks together to see if they'll float.

If your primary revenue stream is advertising, and you cannot afford a single salesperson -- you have a hobby, not a business.

We are continually told that small publishers do not have the scale to sell direct. We are told that those publishers cannot create direct relationships with advertisers. We are told that they have to sell through ad networks.

The popular notion that it is okay to not have your own salespeople is cute, idealistic, and totally wrong.

Every publisher has two businesses. The first business is selling readers on why they should visit your site, and the second is selling your advertisers on why they should spend money with you.

There are 5.7 million businesses with employees in the U.S., and all of them need customers. The trick is to figure out how to define and segment your audience to match the needs of enough of these businesses.

How to Win a Race to the Bottom

Convincing yourself that you do not need salespeople is to implicitly accept the idea that you are not differentiated from other publishers.

If you are a publisher that sells your inventory through a channel that aggregates your site with others, you are effectively telling advertisers that you do not value the uniqueness of your own content, or the importance of your own brand.

Selling your inventory in an aggregated channel is akin to Prada sending its clothes without labels to Neiman Marcus and telling the store to throw them with the rest of the clothes.

You may be in the right vertical, but you are selling a generic product. This is a race to the bottom.

If you demonstrate to customers that you do not value your inventory enough to tell a unique story, do not be surprised when you end up on the discount rack (or worse).

You Cannot Solve Problems You Cannot See

Customers do not buy advertising; they buy solutions to their problems. They buy a better image, more customers, and ego gratification, among other things.

If you put an intermediary between you and your advertisers, you squander the opportunity to solve their problems.

Worse, you lose customer feedback. There are few things more valuable than getting direct feedback from someone who cuts you a check. Having customers tell you how to improve your product engages them deeper with your business and makes you better.

You need a salesperson to get direct feedback.

Building the Story Together

Sales is really an exercise in storytelling. It is the opportunity to define a unique position in the market and differentiate your company from your competitors.

To tell a great story, you need someone who understands your business deeply and knows how to position it. This requires a salesperson.

The primary job of your salesperson is to creatively think about how to position your company to help advertisers solve their problems and achieve their goals. Is a custom ad unit needed? A sponsorship? A site take-over? A widget that helps their visitors accomplish something useful?

If your sales calls become joint brainstorming sessions with your customers on how to accomplish their goals, you can build the story together.

Long Live the Salespeople!

Salespeople are your public representatives. They are your listeners, your problem solvers, and your finders of opportunity. They represent the voice of the customer.

Salespeople are the single most underrated group of people in the advertising business. Unfortunately, they are also the most under-used.

All too frequently, salespeople are used as nothing more than glorified order takers. What a waste of their time and your money!

It is time to celebrate great sales. It is time to applaud the efforts of those who start every conversation by first understanding the goals of their advertisers.

So go hug your salesperson -- and damn it, if you don't have one, hire one.

online publishing

19 comments about "The Most Expensive Mistake You Can Make ".

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Andy Horvitz from Two Plank Consulting, June 4, 2009 at 10:02 a.m.
David,
Well done.
I was a harsh critic of your "Ad Networks Are For Idiots" piece a couple months back. While we will likely continue to disagree on the merits of publisher participation in ad networks, I wholeheartedly agree with your assertions here.
Publishers elevate their brands through selling, most effectively when selling direct. Those who are successful convert that brand value to ad revenue. While this may seem at odds with the interests of ad networks, it serves to elevate the value of the media collectively, allowing for ad networks like ours to deliver ever better results for our publishers.
Reply

Monica Bower from TERiX Computer Service, June 4, 2009 at 10:08 a.m.

*Applauds*

I especially like the two pithy quotations in the opening that perfectly set up the essence of the point - unless you take it seriously, it will never be serious. I think both remarks have much larger applications than the world of online ad publishing.

Carl Farley, June 4, 2009 at 10:19 a.m.

This is the right approach for success as i see it... I just need to perfect it for my business. Currently I have to wear both hats as in publisher and salesperson.

Mark Wahlstrom from Legal Broadcast Network, June 4, 2009 at 10:26 a.m.

Excellent point and post. However, as a firm currently in the process of moving from Ad Network to direct sale finding the right sales person has proved immensely challenging. I would absolutely prefer direct selling and agree with your assessment, particularly on customer feed back. However, most sales people i've encountered in this search process are either mired in an old media mentality and business practices and lack the imagination and fire for new media, or they are total sales pro's who are beyond the reach of early stage companies to reasonably afford and reward at their talent level. I grew up in direct sales and believe it is the only way you can build your brand effectively and hopefully we find that right person at the right stage in their careers. Great analysis.

robin kent, June 4, 2009 at 11:05 a.m.

I see so many business plans without a line item for sales support. When pushed I hear, "well we'll hire a sales person if we must". A sales person as in one! Do they know how big America is?????

Tim Rohrer from Radio One, June 4, 2009 at 11:12 a.m.

Amen, brother!

Andrew Boer from MovableMedia, June 4, 2009 at 11:45 a.m.

David,

What you are saying is 100% true, but maybe not correct.

If more small publishers retained, or had retained their own inventory and sold directly, perhaps the value of their audience wouldn't be devalued by Ad Networks. So why are all of these publishers pursuing an apparently self-destructive path?

Whenever people collectively start to follow a path that is evidently self-destructive like global warming or NINJA loans, it is usually due to some kind of prisoners dilemma where the costs of doing the sustainable action are outweighed by the economic or political realities.

Exhorting publishers to a direct sales model neglects the current economic realities -- small publishing companies need regular revenue coming in the door, and they compete in a marketplace against ad networks who provide greater reach, targeting, and scale at 1/10 of the cost.

The Ad Networks and search engines have significantly lowered barriers to entry, which has led to a glut of content suppliers, as well as increasing ad-blindness.

Ironically, many of the small publishers would never have been able to get started without the ad networks. And many of the Ad Networks got started as Ad Rep firms because small publishers needed scale to sell direct.

Here's a telling statement from your piece: "We are continually told that small publishers do not have the scale to sell direct".

By whom? That message has often come from the *customers*. The agencies. They like to work on a large scale with a few credible and demonstrably effective providers that create as little work as possible. (This is consistent with human behavior, and why Greenwich Capital had half of its money with Bernie Madoff).

The publishers with deeper pockets like Forbes may be able to ride out the storm, but for the most part, Agencies, Advertisers, Search engines, Publishers, and Ad Networks seem caught in a cycle/bubble that seems poised to destroy the business model supporting the creation of expensive, quality content.

The real question is: will consumers ultimately demand high quality, expensive content from a handful of branded, trusted sources?

If so, the content/ad network bubble will burst and the survivors/new entrants will rebuild with new rules like the ones you suggest.

If not, we should expect the proliferation of cheaply produced content supported by low priced ads in a marketplace where most direct sales forces can not compete.

David Koretz from Adventive, Inc., June 4, 2009 at 12:14 p.m.

@ "eric smith"

Generic name, no profile, and no company affiliation?

Way to bravely throw yourself out there!

Recommending that people use salespeople to sell things is "short-sighted, brash," and makes me a cult leader?

If the cult is a group of people that understand that sales takes SELLING, sign me up!

David.

David Koretz from Adventive, Inc., June 4, 2009 at 12:29 p.m.

@Andrew Boer

You raise several interesting points, but I disagree with your conclusion.

Ad networks do offer reach and scale, but if you are a publisher focusing on Rochester, NY, then you don't need either of those things. You need an advertiser that values your audience.

The agencies you speak of DO want scale, but agencies deal with larger advertisers. Most of the smaller advertisers do not have an agency. The solution I am proposing is for smaller advertisers. It is a forgone conclusion that large publishers need salespeople.

I disagree strongly with the conclusion that the question is whether consumers will demand quality content.

I don't think you are giving consumers nearly enough credit. I visit small and large publishers, not on the strength of their brand, but on the quality of their product.

Consumers DO demand quality content, but they are less picky about who publishes it.

That said, advertisers demand RESULTS. Smart publishers large and small will spend their collective energy figuring out how to help them achieve those results.

...and that is best done with a salesperson :)

David.

David Koretz from Adventive, Inc., June 4, 2009 at 12:32 p.m.

@Kate and Mark, great comments & question!

The answer is simple: YOU!

As the head of your small publisher. YOU are the first salesperson. You are the advocate, the carrier of the flag, and the biggest believer in your product.

Like every other small company, you need to start selling yourself. Even if you hate sales, you will benefit immensely from this process, and gain a great respect for the salespeople that do it day in, and day out.

It's REALLY hard to find great salespeople. Start by turning yourself into the company's first great salesperson.

David.

Bret Dangelmaier from ZOS Communications, June 4, 2009 at 12:41 p.m.

(Disclaimer: I used to work for David)

Of all your articles, this one is the most "spot on", and your main theme here is really true in almost any industry.

This one snippet says it all, IMO...

"Sales is really an exercise in storytelling. It is the opportunity to define a unique position in the market and differentiate your company from your competitors.

To tell a great story, you need someone who understands your business deeply and knows how to position it. This requires a salesperson."

Sales people have been undervalued and "abused" for far too long...

Jon Levy from Hype Circle, June 4, 2009 at 1:11 p.m.

Thanks David,

Well you've stirred up a hornets nest with this one. Thanks to Andrew Boer who called it exactly the way it is.

The fact is that most small publishers are hobbyists, not businesses, and networks merely supplement the meager costs of running their blogs. They will always be on the discount rack. The unfortunate by-product is that they lower the perceived value of online advertising for everyone else.

Yes, a publisher must tell a unique story to bring up the value of their inventory, but until you are a leader in your vertical, and have at least a million dollars of premium ad inventory to sell, you are too small for an ad agency to buy from you, and the cost of running an experienced sales team with access to those agencies is not sustainable.

For the few that are actually serious about their businesses, but have not reached the above scale, there are a plethora of niche rep firms and transparent networks that that recognize their strengths and put them in front of advertisers. Why not take advantage of those firms when they will sell your advertising with no risk or up front investment? It's no different from outsourcing your programming.

Networks are a necessary part of the online ad game. They provide efficiencies for publishers and advertisers. The issue is recognizing which type of network makes sense for your business model and leveraging them to your advantage as you grow your business. Even when you are big enough to sustain an in-house sales team, networks will continue to efficiently fill gaps.

I'm a huge believer in sales people. They perform a thankless job, get doors shut in their face, and have to deal with a level of rejection that would send most people crying to their therapists. But the good ones thrive on adversity and live to close the deal. I'm going to give them all a hug today. And, by the way, we are hiring!

Stuart Long, June 4, 2009 at 1:33 p.m.

Absolutely perfect. Effective sales is a result of getting involved in the decision making process. Consistently facilitating beneficial decisions is essential to every business. Publishers without salespeople are out of the loop and are not involved in the process that truly drives every bottom line.

Salespeople are not valued which seems crazy but its routine SOP at most corporations, large and small. This may be because of the assumption that if a salesperson had not facilitated a sale it would have somehow facilitated itself. Please.

Jonas Halpren from Federated Media, June 4, 2009 at 4:24 p.m.

While I agree with your general premise, your theory is overly simplistic. Yes, giving your inventory to a large blind network isn’t a business model. However, you suggest that anyone who aggregates sites is the lowest blind ad net. There are those that sell premium quality content and get very good CPMs and work very closely with their publisher partners.

Many small publishers simply do not have the scale and experience to pay for and manage sales people. Sure I could do direct sales myself and be limited to small endemic buys (maybe), but still on my own I don’t have the reach for the big brands. Nor do I have the time to take on what is another full time and very difficult job. That’s why good sales people are worth so much – selling is hard work.

Agencies and marketers buy scale, not because they are lazy, but because there is only so many hours in the day. If every publisher, no matter the size had their own dedicated sales force, media buyers would be overwhelmed meetings, phone calls and paperwork.

So it makes sense to aggregate smaller properties to take advantage of economies of scale. What smaller publishers can do is vet their potential partners carefully and only work with those that see value in your content and are willing to have a deeper relationship than the average remnant network.

As a small publisher myself, I rely on multiple channels to monetize my site. Yes, I do use some ad nets to fill some of my remnant inventory. But that is what they get – remnant, non-guaranteed inventory.

Curious what do you publish? Is Adventive a technology provider or is it a network.. From the site seems like the later. So based on your post, why would a publisher “sign up”.

Adam Farren from Wikinvest.com, June 4, 2009 at 5:37 p.m.

Like others in this comment stream, I'm wearing both hats as a salesperson and a publisher. I love this line from the article, David:

"Selling your inventory in an aggregated channel is akin to Prada sending its clothes without labels to Neiman Marcus and telling the store to throw them with the rest of the clothes."

I agree, but would build on this because I think its a bit oversimplified. Not all ad networks are created equal - some will force you to throw your inventory into a bucket labeled Remnant where the CPMs will be ridiculously low - while others will put your inventory in a bucket called Premium where you'll see better revenue. Then there are the networks who put you in a vertical channel to sell to endemic or near-endemic advertisers, where the CPM (and ad performance) is likely the best. To take it back to your analogy, you're not always just thrown in with the rest of the clothes - you have some control over WHERE you're placed in the store and what other brands/clothes you are placed next to - and it is possible, that if you are given featured placement (i.e. the storefront display, so to speak) you'll reach customers you wouldn't have reached selling on your own.

BUT - I'd still recommend to any publisher large or small to sell direct. Even if you see more revenue in the short term from big brands and agencies, in the long term you cripple your business. You must build direct relationships with your site's sponsors, and adapt over time to find solutions to their problems through the way you promote their brand on your site. You cannot do this with an ad network, that must offer a solution that fits across all of its client sites. You need to offer solutions that are unique to your own site, and cannot be found anywhere else, if you want to maximize ad revenue and build long-term relationships to sustain your business. And that, as you say, is what creative sales people are for!

Paula Lynn from Who Else Unlimited, June 4, 2009 at 8:02 p.m.

Number ONE: You have to pay salespeople. I mean pay, not a "you have the opportunity to earn" blah blah. And that means benefits and applicable expenses, too. 22 cents a mile does not cut it. A starting company needs to pay a venerable salary and invest in sales and advertising what they are selling before those owners give up their day job. It may be 12-18 months before they see the results of the salesperson. Start-ups can't wait. And if anyone thinks it is that easy to be that little salesperson who is trying to call on clients who are being overwhelmed with sales calls, then do it before you expect someone else to do it and then turn over your list. Remember, too, about a third of your advertisers will be gone next year. And if you can't be a salesperson to sell your publishing content to readers and advertisers, it would probably be best to work for someone else. Revolving door employees does not a profitable/successful company make. Now you can network these responses.

David Koretz from Adventive, Inc., June 4, 2009 at 8:48 p.m.

@Jonas, Adventive is a technology provider that provides the optimization capabilities of search in the world of display advertising.

We are not an ad network and do not compete with ad networks, so this is not a self-serving viewpoint.

I am just a huge believer that salespeople are heavily under-used in the world of publishing.

I believe strongly that publishers would be better off if they learned how to sell their own inventory, differentiate their product, and listen directly to advertisers.

David.

Jonas Halpren from Federated Media, June 5, 2009 at 2:09 a.m.

David,

I think you misunderstood my comment.

1) I agree it is important for publishers to differentiate themselves and work with advertisers. However, that is much different than hiring and managing sales people.

2) I am not saying publishers should only work with networks. Direct sales bring in higher cpms and margin. But a quality networks and exchanges and other ad sales groups can provide good sources of additional resources.

3) I'm a big fan of great sales people as well. It is an amazing talent.

4) Having a dedicated sales force may not be right for every publisher.

5) I wasn't trying to insinuate you were doing anything self-serving. I just wasn't clear on what exactly Adventive does after looking at the web site. I'd be interested to learn more about how publishers are using your product.

David Koretz from Adventive, Inc., June 5, 2009 at 11:01 a.m.

@Jonas, I'll reach out to you to give you a better view into Adventive.

I do strongly believe that while ad networks may bring incremental revenue in short-term, they will degrade CPM prices long-term by competing against a publisher's internal sales force.

My last column subtly made that argument :)

David.